Heartland Group Holdings Ltd. · NZX:HGH
Heartland — Investor Presentation (June 2016)
22 slides from Heartland's investor presentation, Jun 2, 2016
Slide 1: Jeff Greenslade | Chris Flood | Simon Owen
June 2016 Jeff Greenslade | Chris Flood | Simon Owen Annual Meeting 1 November 2013 | Page 1
Slide 2: Important Notice
Important Notice This presentation has been prepared by Heartland Bank Limited and its group of companies (“Company”) for informational purposes. This disclaimer applies to this document and the verbal or written comments of any person presenting it. Information in this presentation has been prepare
Slide 3: Overview of Heartland
Overview of Heartland Annual Meeting 1 November 2013 | Page 3
Slide 4: Heartland Snapshot
Heartland Snapshot Heartland Bank Limited, NZX-listed registered bank New Zealand bank registration 17 December 2012 Size Market Cap ~$596m (31 May 2016) Total Assets ~$3.4bn (31 March 2016) Total Liabilities ~$2.9bn (31 March 2016) Credit Rating (Fitch) BBB (outlook stable) Principal Activities Inn
Slide 5: Evolution of Heartland
Evolution of Heartland Predecessor Businesses Heartland Online platform Merger Launch Bank Registration Open for Business MARAC Insurance April 2016 2005 2011 Amalgamation 2012 NZX Listing Heartland Bank / 1875 Heartland NZ 1952 2011 December 2015 2014 1923 10% Stake 2014 2011 2010 GMAC motor vehicl
Slide 6: Heartland Strategy
Heartland Strategy Strategy To provide ‘best or only’ specialist products in niche markets that are under-serviced by the mainstream banks Priorities Market leadership in digital distribution and digital marketing to deliver a radically better customer experience based on ‘ease and speed’ Expansion
Slide 7: Strategy is working…
Strategy is working… • Returns to Heartland Total shareholder return (TSR) shareholders have 250% materially exceeded that of 200% 179% the wider market over the 150% past four years TSR 100% 89% • Heartland has increased 50% the dividend paid per share - since 2013 (50%) 2012 2013 2014 2015 2016 So
Slide 8: Key Financial / Operational Metrics
Key Financial / Operational Metrics Heartland has achieved consistent and meaningful improvement in all key operational and financial metrics as it has increased focus on niche products FY2012A FY2013A FY2014A FY2015A CAGR Net Interest Income 83.6 95.5 109.1 134.4 17.1% Net Interest Margin (%) 4.0%
Slide 9: Different from local bank competitors
Different from local bank competitors 30 June 2011 30 June 2015 • Focus on providing specialist products to market niches • Significant progress made in execution of this strategy Total Net Receivables3 - $1.7b Total Net Receivables3 - $2.9b • 81% of loans in either 1Bank overlap assumed to be Resid
Slide 10: Half Year Overview
Half Year Overview 9% Growth in Profitability Financial Year Overview 6 months to 6 months to 12 months to • Achieved NPAT of $25.6m Dec 2015 Dec 2014 Jun 2015 (NZ$m) (NZ$m) (NZ$m) Net interest income 71.5 65.7 134.4 • Increase in NPAT of $2.1m or 9% Net other income Net operating income * 6.3 77.8
Slide 11: Balance Sheet Summary
Balance Sheet Summary Growth in receivables • Total assets decreased by $15m • Net finance receivables increased by $67m or 2% • Core asset classes up $87m, retail down $20m as we exit as planned • Seniors Finance book up $6m. NZ up $9m and Australia up A$18m Balance Sheet Summary Annual Meeting 1 N
Slide 12: Cost of Funds
Cost of Funds Solid funding position Decrease in COF on back of OCR decreases, and reduced margin on term deposits Annual Meeting 1 November 2013 | Page 12 | Page 12
Slide 13: Core Business Updates: Household – Consumer
Core Business Updates Household – Consumer: NZ$776m • Personal lending and motor vehicle loans - 27% of net receivables • Strong growth of $40m or 5%, expected to continue in 2H16 • Fast, simple, transparent loans originated online NZ$780m • i-finance and Harmoney • Harmoney facility renewed with si
Slide 14: Core Business Updates: Household – Seniors Finance
Core Business Updates Household – Seniors Finance: NZ$344m/AU$392m • 26% of net receivables - 12% in NZ and 14% in Australia • Combined growth of $6m or 1% • $9m or 3% in NZ and A$18m or 5% in Australia • Steady increase in new business, high repayment levels • NZ – increase awareness and build bran
Slide 15: Core Business Updates: Business
Core Business Updates Business: NZ$825m • 28% of net receivables • Growth of $24 million or 3% • Reposition lending towards smaller loans to SMEs • Open For Business – “quick application- quick decision” business loans NZ$833m • Early stages of development, applications expected to increase in 2H16
Slide 16: Core Business Updates: Rural
Core Business Updates Rural: NZ$505m • 17% of net receivables • Growth of $17m or 3% • Livestock financing, financing younger farmers, farm transition loans NZ$506m • Alliance partner channel • Monitoring the dairy sector with close attention Photo credit: Sara Orme As of December 2015 | Page 16
Slide 17: Core Business Updates: Dairy Update
Core Business Updates Dairy Update • Direct exposure to dairy farmers is 8% of Heartland’s total lending book • The average loan to value ratio (LVR) for Heartland’s dairy exposures is 59% • Should the downturn continue or worsen beyond current expectations such that the viability of that industry w
Slide 18: Digital Distribution
Digital Distribution Combine Heartland’s smaller size and greater agility with disruptive new technologies and powerful digital marketing channels to: • Extend Heartland’s reach into key specialist markets • Deliver a radically better customer experience based on ‘speed and ease’ of application and
Slide 19: Digital Distribution - Business
Digital Distribution - Business Open for Business Heartland aims to transform how New Zealand SMEs access finance enabling small businesses (the backbone of New Zealand’s economy) to grow “We identified a gap in the market for small business owners, the vast majority • In April 2016, Heartland launc
Slide 20: Digital Distribution - Consumer
Digital Distribution - Consumer Harmoney • In September 2014, Heartland acquired a 10% stake in Harmoney Corp, New Zealand’s first licensed peer-to-peer lending platform • The Harmoney lending model challenges the traditional bank lending model • This model is complementary to Heartland’s strategy o
Slide 21: Growth Prospects
Growth Prospects Consumer HER SME Consistent growth Ageing demographic Differentiated to date; untapped compelling online distribution personal loan opens up significant market SME market | Page 21
Slide 22: Key Messages
Key Messages Strategy is working Infrastructure is Significant Profit, ROE and in place to grow opportunity share price are ahead all increasing | Page 22
Heartland Group Holdings — Investor Presentation (June 2016) on 6ix